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October 24, 2007
Comments Submitted
Pursuant to Proposed Rule Making re: 490-105 WAC
Vocational
Schools and Their Inherent Drawbacks.
For-profit vocational
schools have a well-earned reputation for fraud and
misrepresentations when it comes to their students, or
consumers. The profit incentive in many instances eclipses the
incentive to educate, and in some cases, such as CRI, Crown
College and BCTI, there appeared to be no incentive to educate,
only profit. Profiting and educating are not always
compatible. An admissions counselor at a for-profit career
school, in many instances, can be more concerned about the
school’s profit, and therefore his or her job, than about the
student’s welfare. Thus, many students are fraudulently induced
to enter programs which they not suited for or are not
compatible with their goals because the admissions counselor and
administration is focused on the financial aid that student
brings.
The students who
attend such a school tend to be less sophisticated and affluent,
sometimes being first generation college attendees and are more
trusting of “admission counselors” and thus more susceptible to
fraud. Public universities are less dependent on student’s
money and therefore are more candid with prospective students.
At many for-profit vocational schools, unfortunately, the only
criteria that admission counselors focus on are whether a
student qualifies for student aid and then how much aid they
might receive.
Many students view
admission counselors as neutral persons who have the student’s
best interests at heart and expect them to act as a doctor or
lawyer or other professional who owes them a fiduciary duty.
They do not view them as agents of a profit-driven business
whose interests might be incompatible with their own. Thus,
agencies that govern for-profit school should make a concerted
and special effort to protect the rights of these students.
The school closures
that apparently prompted this new law were caused by two schools
shutting down because of, ostensibly, financial distress. I
speak of BCTI and CRI. However, these schools were initially
quite profitable and the reason that they fell into financial
distress and eventually closed were because their business model
was based on misrepresenting their facilities, services,
curriculum, faculty, costs and programs to prospective
students. The fact that these schools closed was actually a
fortunate thing for the remaining students. The fraud being
perpetuated on them was terminated and some were eligible to
receive tuitions refunds from the state and the federal
government. This was the case with Crown College, another
school that followed this scenario, though it was not under the
jurisdiction of the Workforce Board.
The Workforce Board
appears to place an inordinate focus on finances and keeping
schools open. In the case of CRI, a review of the Preference
Complaint, Motion for Summary Judgment and the deposition of
Alen Janisch filed by the U.S. Trustee shows that CRI
manipulated its finances to pass the muster of the U.S.
Department of Education and possibly the Workforce Board as
well. Those documents can be viewed on
www.criasaga.info. Thus, CRI would not have shown up on the
Workforce’s Board’s radar if the focus had just been on
financial disclosure. In fact, there are schools that suffer
financial problems yet still provide a good education and
truthfully represent their programs to prospective students.
What brought CRI and
BCTI down were misrepresentations, their programs, and
overpriced and substandard education and facilities, which
resulted in complaints being filed. These complaints, as they
became more voluminous, led to adverse media scrutiny. This,
in turn, led to desertion of students which THEN led to
financial distress. In other words, if the WorkForce Board
wants to be ahead of the curve and more importantly, not behind
it, in dealing with “at-risk” or problem schools, they need to
focus on complaints by the students about the school in addition
to reviewing financial disclosures. Thus, the precursor to
financial problems in BCTI and CRI were the student bona fide
complaints.
After reviewing
documentation regarding the Workforce Board’s interaction with
Alen Janisch, it appears that the Workforce Board did not have
the resources to sufficiently police CRI and discover fraud on
their own. It was student complaints, many of them, which took
place over a span of 7 years, which alerted the Workforce Board
to the fraud. I would like to see the Workforce Board’s
rulemaking focus on removing impediments to students filing
complaints.
Importance of
State Enforcement
All schools, but
particularly for-profit vocational schools which as I have
indicated before are more prone to fraud and misrepresentations
in dealing with their students, are governed by the triad of
agencies which consist of:
(a) The Department of
Education, which administers financial aid to the students and
imposes certain financial requirements on the schools which as
concerns their student’s receiving financial aid.
Unfortunately, they leave the responsibility for deciding what
schools are eligible for financial aid up to the accrediting
agencies. Moreover, Washington D.C. is far removed from this
state and it administers policies and financial aid for millions
of students.
(b) The accrediting
agencies are the gatekeepers for financial aid; however, they
are not very diligent in enforcing their policies. They did
nothing to close down BCTI or CRI despite, as the record now
show, those schools were in violation of many regulatory
policies. From what I have seen in the case of Crown College,
when a complaint was filed, they merely asked the school to
respond to it, accepted the response regardless of its
reasonableness, and did not do an independent investigation.
Again, these agencies are headquartered on the east coast like
the Department of Education
(c) Washington does
have a Consumer Protection Act, and it empowers attorneys to
pursue these claims and receive attorney’s fees for their
efforts. However, this remedy is expensive and not easily
obtainable. Many attorneys are reluctant to take such cases on
a contingency basis which is the only basis on which most
students can get legal representation because they do not have
the means. In the case of Crown College and CRI, students made
desperate attempts to retain attorneys, but were unsuccessful.
When a case was finally brought and won, hundreds of students
had already been defrauded. One thing Crown College students
did not have which CRI and BCTI students had was the benefit of
state oversight and, more importantly, access to the tuition
reimbursement fund.
(d) The state agencies
in Washington, the Higher Education Coordinating Board or the
WorkForce Board, are the closest to the schools and students who
are victimized by them. They have a lot less schools to govern
than the Department of Education or the accrediting agency.
They read the local newspapers and listen to local politicians.
Thus, they are in the best position to assist students who are
cheated.
Criticism of WAC
Code Proposals
No Definition
for “Frequent”
In the criteria for
what constitutes an at-risk school, “frequent sustained
complaints” is listed as a criteria. (WAC 490-105-030 new
section (5)(d)It is unclear what constitutes “frequent.” This
term should not be left completely up to the discretion of the
Workforce Board nor, to vocational schools challenging findings
that they are “at-risk”. Obviously some discretion is desirable
and necessary. However, there should be some guideline, some
formula tied to the volume and frequency of complaints which
would define frequent. For example, three complaints a year
may not be many complaints to a school with 1000 students;
however, what if there were only 30 students? Perhaps the
formula could be expressed as a percentage. Also, is a
complaint which is being appealed by the school going to be
considered sustained? Again the definition does not have to
absolute, merely a guideline. Please note that the other
criteria, (c) a decrease in enrollment and (e) staff turnover
are defined as percentages, thus not defining what constitutes
“frequent” is puzzling.
The new law specifically denotes that one of the criteria for
at-risk schools is a “pattern or history” of substantiated
complaints; however, this is not in the proposed WAC code. At a
minimum, these words should be added to the definition of
frequency and be more properly defined.
Also, the rules should
specify that just because a complaint is being appealed does not
mean it has not been sustained.
No Definition of
“Misrepresentation”
Again, as set forth in
the paragraph above, misrepresentation is listed as criteria for
the determination that a school is at-risk. However, it is
completely undefined just as frequency is. I feel it should be
defined and that the definition should include any
misrepresentation made to the Workforce Board, including
material misrepresentations on any document required by any
regulatory agency and misrepresentations made to students,
including, but not limited to faculty credentials, curriculum,
job placement statistics and facilities.
The Fifty Percent Turnover of Staff or Decrease in
Enrollment to Trigger the At-Risk Designation Appears Too High
Having a turnover of
faculty of 50% appears to be somewhat of a remote possibility in
any at-risk or potential at-risk school. I would be curious to
know if CRI or BCTI ever had either a 50% turnover of staff or
decrease in enrollment in any one year, and if that is the
criteria that Board used to establish the percentage. I would
think that a 25%-33% would be more appropriate. Again, there is
an “escape clause” which allows the Board to overlook or forgive
criteria that would normally designate a school as at-risk if
there are extenuating circumstances or events. Therefore, the
criteria for evaluating a school should be less stringent so
that more schools could be scrutinized and I believe that a
25-33% staff turnover or decrease in employment would be good
indicia of problems which would provoke the Workforce Board’s
scrutiny.
WorkForce
Board’s Proposed Changes to WAC 490-105-180
The WorkForce board
suggests changes to (7)(ii) and (iii) which I disagree with. I
am concerned about the insertion of the words “if necessary” as
it might make informal hearings less likely to happen. I
believe that the criteria for not having an informal hearing
should be set forth.
As concerns the deletion of the 15 working days following the
hearing, this leaves no time requirement for a determination to
be made. I feel that there should be some requirement for a
response. Under this revision the Workforce Board could
theoretically wait until infinity to respond, a rather long
wait. If 15 working days is too short a time, then another more
appropriate or attainable time limit should be set forth and
reasons, if any, why it might be waived, within reason.
Additional
Proposed Changes In the WAC
In light of my
comments earlier that student complaints are the best indicator
of whether or not a school is fulfilling its obligations to
students and consequently, whether or not it will end up in
financial distress, I would like to point out conditions that
existed, at least at CRI, that made it more difficult for
students to either complaint or know they had the right to
complain. These problems were:
(a) Many students did
not know that they could complain to the Workforce Board
regarding the numerous misrepresentations that were made to them
by CRI management, concerning the time it would take to complete
the program, the shoddy equipment and instructors. This
appeared to be because the information was “tucked” into the
enrollment agreement and catalogs and was not prominent so the
information was missed. Now, obviously students bear a
responsibility to protect their interest and perhaps they should
have noticed it;
(b) Many students were
not aware that there were sustained complaints against the
school concerning the very same conditions they were facing as
there was no way to review this information;
(c) Some students were
concerned about policies written into the enrollment agreement
-- which I have seen in other schools, including Crown College
-- that stated if a student is “disloyal” to the school or acts
in such a way to discredit the school, they can be expelled.
This created a chilling effect on potential complaints.
There are remedies
that I would like to propose that would address these issues,
keeping in mind the fact that student complaints will alert the
WorkForce Board to problems with a school long before any
financial symptoms appear. It is in the best interest of the
Board to make sure that students are aware of their rights and
problems with a school can be addressed before they fulminate,
the schools closes and the Workforce board and the Department of
Education has to use taxpayer money to refund loans and tuitions
paid by stranded students.
Students’ Rights
Under the RCW and WAC Should be Posted.
WAC 490-105-040 (5)
(q) and (6) (b) should be amended to require that
(a) Information
regarding the fact that Washington State law gives a student the
right to make a complaint against the school and the fact that
you might get your tuition refunded or in the alternative, the
entire statute (RCW 28C.10.12) should be included in the
enrolment agreements and catalog pursuant to WAC 490-105-040.
The statute is short and easy to understand. If the entire
statute is not cited, then the pertinent parts concerning
complaints should be. There should be a place for the student
to acknowledge their rights with a signature or at the very
least, initials.
(b) In addition to
being in the catalog and enrollment agreements, the entire
statute (RCW 28C.10.12) should be posted in a conspicuous place
in each classroom, much like a Worker’s Rights under OSHA are;
alternatively, it should be posted in a conspicuous place in the
school, like a bulletin board on the premises.
(c) Alternatively or
additionally, it could be placed on a separate piece of paper
with the requirement that it be signed by the student and that
the school retain a copy of such a disclosure in its records, as
well as give one to the student.
(d) If these schools have websites, a link should be provided to
the Washington State Law (RCW 28C.10.12) and it should be
promoted on a link stating “Student’s Rights under Washington
State Law.”
Why:
Unfortunately, enrollment agreements and specifically catalogs,
are akin to rental car contracts. Many students simply do not
read them and then are unaware of their rights. Educating
students about their rights under the law and the fact that
these schools will be aware that these students are
knowledgeable will provide a powerful disincentive to deceive
students.
Why: Merely
citing a entire chapter of law is not useful to many students
who will not be inclined to or lack the recourses to research
the law. By citing the pertinent parts of the law the student
will be alerted to their rights without having to do independent
research.
Why:
Unfortunately, many of the persons who choose to attend private
vocational schools are first generation college attendees and
are not among the more sophisticated. They are most likely not
going to take the time to look up a coded statute to actually
see how it might be implemented and therefore might discount or
not be aware of what the advantages of filing a complaint are,
thus not alerting the Workforce board to problems with the
school.
Cons: It is
certainly not the intention to promote the filing of frivolous
complaints. However, the law and options and recourse under the
law should be made available to consumers. The assumption which
some schools might make, that apprising a student of their
rights would make them more inclined to file frivolous claims is
not persuasive. Surely, the schools would not advocate the
Board not making a concerted effort to make students aware of
their rights for fear that they might exercise them! As far as
expense to the schools, it would appear to be minimal.
Enrollment agreements and catalogs are on digital medium and are
constantly updated. Placing a piece of paper on a board is
obviously not going to expensive. The fact that many students
are not aware of their rights could be construed as indicating
that the Board is not doing a good job of informing them of
same, and that it should take more aggressive measures to do so.
Sustained Complaints Should Be Posted.
A list of sustained
complaints against the school should be posted on the Workforce
Board’s website, or at the very least, if not on the website of
the actual school. The enrollment contract, catalog or if the
Workforce board were to adopt it, the posting of the law
governing complaints in a conspicuous place in the classroom or
a public place at the school, should include the fact that
sustained complaints are available online at the Workforce Board
website. These complaints should be public knowledge the same
way that lawsuits are public knowledge. Presently, people can
look up any federal lawsuit, in Pierce County. Linx software
allows subscribers to review lawsuits filed in that venue. We
have the technology to make this happen and we should do it.
The WorkForce Board already publishes the list of schools who
have been closed.
Why: This would
be a powerful incentive for schools to not “misbehave” and would
alert students to prior complaints and issues with the school.
There Should be
Language or Rules Promulgated That Make it Clear that a Student
Cannot be Expelled for Making a Complaint to the Workforce Board
As I indicated before,
many enrollment contracts and catalogs contain provisions which
indicate that students can be expelled or placed on probation
for “activities” which are detrimental to the school. CRI
management have allegedly used the threat of being expelled to
curb the desire of some students to complain about unfavorable
conditions at the school or misrepresentations the school made.
There should be language added to WAC, that would dictate that a
school makes clear to a student that they cannot be retaliated
against for lodging a complaint with the Workforce Board.
More Proactive
Financial and Complaint Investigation
At the hearing two
former students from CRI testified how that school deceived the
Department of Education and the Workforce Board about its
financial condition. It also allegedly did not send the
Workforce Board documentation it was required to do by law. In
one of these instances, that documentation was the teaching
credentials for staff and also documents that would have
indicated high staff turnover which is being proposed as a
criteria for designating a school at risk. Thus, to some
extent, the Workforce Board and the students it protects can be
victimized by deceit on the part of a school.
There is obviously not
much remedy to catch school owners and administrators who make
misrepresentations to the Board in required documentation. The
Board has very limited resources. It just should be aware that
in the long run, if it is able to expend a little more effort
investigating complaints and scrutinizing reports from the
school, they may be able to prevent a huge loss such as the half
a million dollars the state is out because of CRI.
Student complaints are
the proverbial canary in the mine; they are the horn and
flashing lights of an oncoming car. Financial distress is the
shriek of brakes before the collision when it’s already too
late.
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